Investments in Quality and Innovations Helped Hanesbrands’ Performance, says Professor Mike Lord

1.28.2011 Article, Faculty News, Retail

Hanesbrands Inc. reports surge in fourth-quarter net income

Reposted from Winston-Salem Journal | by Richard Craver

Hanesbrands Inc. decided Thursday that it couldn't wait to report its strong finish for the fourth quarter and fiscal year 2010.

The company posted its performance — a $28 million profit in the fourth quarter and $211.3 million for the year — six days earlier than its initial Feb. 2 release date.

The surge in fourth-quarter net income came primarily from a 30.9 percent increase in outerwear sales and 20.8 percent rise in international sales, as well as strong holiday sales.

The company also reported no restructuring charges in the quarter compared with $7.6 million a year ago.

"We decided that since the results were final and our 2011 guidance was completed, it was in the best interests of shareholders and potential shareholders to have more public information and communication from the company" sooner than originally planned, spokesman Matt Hall said.

Richard Noll, the company's chairman and chief executive, said he was pleased the company "significantly exceeded our initial sales expectations by generating double-digit growth and gaining significant market share."

"With our strong brands and global supply chain, we are in good position to address the challenges of inflation with our retail partners and continue increasing sales and market share."

Michael Lord, an associate professor of management at Wake Forest University, said that Hanesbrands' "investments in quality and innovation continue to show gains."

"Its competitors in many key segments are not particularly strong. At the higher end, there is a proliferation of companies with niche performance products and more fashion-oriented brands. But Hanesbrands continues to do well as a mass-market leader."

The company said it expects double-digit sales growth in fiscal 2011 in a range of $4.85 billion to $5 billion, and a range of diluted earnings of $2.60 to $2.80 a share. Its earnings for fiscal year 2010 were $2.16 a share.

Part of the revenue growth is likely to come from price increases Hanesbrands plans this year to help offset higher costs of raw materials, particularly cotton.

"The timing and frequency of price increases will vary by product category, channel of trade, and country, with some increases as frequently as quarterly," the company said.

Noll said that because the company last year anticipated the higher cotton prices, it has been able to fix those costs through Sept. 30.

"Both the overall economy and specific commodity concerns like cotton need to be watched, but they appear to be manageable for the next few quarters at least," Lord said.